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Imminent Challenges Threatening The Supply Of Lithium Ion Batteries

With their high energy density and excellent longevity, lithium ion batteries (LIBs) are the obvious choice for engineers, powering everything from children’s toys to the most innovative electric vehicles.

The demand for LIBs is on the increase and showing no sign of slowing down (with demand for battery manufacture around the globe expected to double over the next four years). For production to keep up, there are going to be some difficult decisions to make.

The supply chain for LIBs is complex with an ever-increasing gap between demand for the batteries and the ability of manufacturers to supply them.

Material Costs

Improvements in producing LIBs have reduced some of the major cost burdens of these batteries over recent years. The price per unit of power has fallen dramatically.

When LIBs were first introduced, their costs were prohibitively high for most applications, running at up to $1000USD/kWh. At such a high price, the material costs were negligible in the grand scheme of things.

However, now that this technology is far more widespread and well understood, cell pricing has come down to a 10th of that price. And now, material costs have become one of the most significant factors.

Scarcity

Even if material costs were not a major factor, it is expected that the availability of some of the raw materials used in LIBs is likely to pose a problem in the near future.

Cobalt, graphite and lithium are becoming increasingly scarce (and they are all primary active components of the cathodes and anodes in a LIB), and it seems likely that the lack of availability of these materials might present a bottle-neck in the production of LIBs. At best, it’s likely that the cost of these materials will increase as they become harder to source. At worst, they could have a much bigger impact.

Cobalt in particular could present a significant hurdle to overcome in LIB production. As a central component forming the cathode of LIBs, it would be impossible to create batteries as we know them without Cobalt.

Unfortunately, Cobalt is relatively scarce in subsurface abundance, and the large majority of it comes as a by-product of copper and nickel mining. While seemingly a non-issue at first glance, the dynamics of the resource industry make relying on a by-product material as a primary component a risky proposition.

Fluctuations in the extraction of nickel and copper, which are not uncommon, have a knock-on effect to Cobalt supply. In turn, the ability to supply LIBs is impacted. The supply of the materials required for production hinges on the economic health of not just one resource, but many. As such, there can be significant volatility in gathering the materials required to produce LIBs.

In essence, the LIB supply chain is a victim of its own rapid growth, which might serve as a powerful lesson that we can apply to other technologies whose material-resource demands are on track to outpace their global supply.

The supply of mineral resources can be hard to gauge, which is yet another reason why engineers are seeking alternatives. Time will tell whether an alternative is found before one of the potential bottlenecks to production really takes hold.